Every person over the age of 18 must ask themselves two
questions: what happens to my assets when I lose my legal capacity
through injury, disability or disease and what happens to my assets
when I die?
What happens to my property when I lose my legal
Legal capacity is a legal term describing your
ability or power under law to enter into contracts (e.g. leasing a
property), administer your money in the bank (e.g. drawing and
transferring money), make property decisions (selling or buying a
property) and to sue and be sued in your own name.
Legal capacity is lost when you are found to be incapable of
making decisions due to mental incapacity as a result of an injury
(e.g. motor vehicle injury), disability or
sudden illness (e.g. dementia or Parkinson's
When you lose your legal capacity, you lose your competence to
make any decision associated with your assets. All your rights to
deal with your assets are stripped from you and you are left with
no recourse to intervene.
What is an Enduring Power of Attorney
An EPA is a legal document which, in some ways,
operates in the same as a Will. It enables you to appoint a person
(or persons) to determine what should happen with your assets
while you are still alive, whereas a Will only
operates after you have died.
The appointed person(s) can manage your money in the bank, buy
and sell properties in your name – everything you would have
been able to do was it not for your legal incapacity.
You may choose whoever you feel you can trust to look after your
affairs (your spouse or partner, another family member, trusted
friend, accountant or lawyer).
You determine when your EPA should come into
effect – immediately (which is useful for when you are out of
the jurisdiction) or only after you lose your legal capacity.
What happens to my property when I die?
Upon your death, all your assets are frozen until a person is
appointed by the court to legally administer your estate (to pay
your debts and distribute your property).
If you die leaving a valid Will, that person
will be the person you appointed under your Will to do the job
(called your executor); on the other hand, if you die without a
valid Will, the court will appoint someone (called your
administrator) from an order of persons fixed by the Administration
Act 1903 (Act).
The process of appointing someone to administer your deceased
estate takes between 3 and 6 months on average, is
expensive and puts a lot of strain on your
What is a Will?
A Will is a legal document whereby you determine how to dispose
of your property when you die. Dying without a valid Will bring the
laws of intestacy into operation whereby the
government decides who will receive your property in an
order fixed by the Act.
Wills are categorised into two groups; basic
Wills (whereby you leave your property to your spouse and
then onto your children in equal shares) and complex
Wills (a comprehensive legal document that enables the
setup of testamentary trusts to provide for your minor children or
grandchildren, deals with blended family issues or to provide
detailed instructions to administer complex estates).
It's up to you to decide who benefits from
your assets, at what time and under what terms. Ideally, estate
planning should aim to ensure that your assets pass to chosen
beneficiaries in exactly the way that you intend while legitimately
minimising tax for those beneficiaries and without
leaving a legacy of family disputes.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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